* Shares close slightly lower
* CEO-designate engaged in F-35 contract talks
* Hewson to step up visits to Congress, Wall Street
By Andrea Shalal-Esa
WASHINGTON, Nov 12 Lockheed Martin Corp
said on Monday Pentagon officials have voiced support for
Marillyn Hewson, named to take over as chief executive after an
ethics scandal forced out the previous CEO-designate on Friday,
and have urged the company to stay focused on its flagship
program, the F-35 Joint Strike Fighter.
Current Chief Executive Bob Stevens, who will stay on as
executive chairman when he retires as CEO at the end of the
year, told analysts that the Defense Department was
understanding about the management changes, but that it also
reiterated the importance of keeping the F-35 fighter on track.
Stevens said Lockheed informed the Pentagon after the close
of the stock market on Friday that its president and chief
operating officer, Chris Kubasik, had been forced out after
admitting to an inappropriate personal relationship.
Kubasik had been due to replace Stevens as chief executive
in January. The news on Kubasik emerged hours after CIA Director
David Petraeus resigned after admitting to an extramarital
Analysts said the news was disappointing for Lockheed since
Kubasik had been well-regarded by investors when he served as
the company's chief financial officer.
Lockheed shares dropped as low as $89.10 on Monday, their
lowest level since July, but recovered some ground to close down
17 cents at $89.81.
Rob Stallard at RBC Capital Markets said investors know
Hewson less well, but view Hewson's leadership of the electronic
systems division positively.
"With Bob Stevens staying on as executive chairman, and
Bruce Tanner still the experienced CFO, we doubt if Lockheed's
operations or financial results will be notably impacted by this
change," Stallard wrote in a note to clients.
Stevens said Lockheed was focused on meeting its commitments
to customers, investors and employees, adding, "We will do the
right thing and focus on returns and our commitments."
Hewson and Stevens spoke with analysts on Monday morning to
try to reassure investors that the company's leadership changes
would not alter its focus on cutting costs, delivering programs
and expanding international sales.
"The initial response has been an understanding of the
situation that we faced here and an understanding of the actions
that we've taken and a full measure of support for Marillyn in
her new position," Stevens said.
Stevens said Pentagon officials also told the company:
"Don't lose focus on the commitments that you've made on the
F-35 specifically and on other programs."
Stevens said Hewson was very familiar with the breadth and
depth of Lockheed's operations and had been deeply immersed over
nearly 30 years in many of the company's key programs, including
the F-35 fighter program over the past nine months.
For the last three years, Hewson had run Lockheed's largest
business area, electronic systems, with 45,000 employees and
annual revenue of more than $14.5 billion, which would rank
among the top 30 defense companies if it were a stand alone
"She's consistently grown revenue, expanded margins,
generated cash," Stevens said. "She has been an exemplar in
modeling ethics and integrity in her personal and professional
life and she will make an outstanding chief executive officer."
Hewson, who was already slated to become president and chief
operating officer in January, said she had taken part in
high-level talks with the Pentagon about a contract for a fifth
batch of F-35 jets, and would remain closely engaged in the
Those talks have been under way for nearly a year, prompting
one of the Pentagon's top F-35 officials to describe ties
between Lockheed and the government as the worst he'd ever seen.
Hewson said she was committed to securing a contract for
those jets, which would free up funds for a sixth batch, and
said Lockheed would deliver all airplanes as scheduled this year
despite a strike that slowed production earlier in the year.
Lockheed last month warned investors that it faced a
potential termination liability of $1.1 billion on the F-35
fighter program unless it received additional funding for work
on a sixth batch of airplanes by year-end.
"We are going to meet our commitments this year on
delivering the aircraft that we committed to, the support for
the customer is strong and so we'll continue to be very much
engaged and we won't miss a beat on F-35," Hewson said.
Stevens said Hewson was well suited to be CEO because of her
long years of experience in running various company divisions,
as well as what he described as her "remarkable" people skills.
"I know you're going to find this extraordinarily hard to
believe, people seem to like Marillyn more than they like me,"
Stevens joked, adding that he had learned "a lot from her in our
ability to work together over the years."
For her part, Hewson said she was focused on clearly
communicating the company's priorities, fostering innovation,
listening to customers, and continuing to develop its workforce.
She also plans to step up visits to lawmakers in Congress, and
to increase her outreach to Wall Street investors.
"I think it's also important that a leader put in place an
environment where people can do their best work, where they feel
comfortable to bring their best ideas forward," Hewson said.